Stringer's pension promises

The city comptroller said he would overhaul the city pension funds and had the sway to get it done.

City Comptroller Scott Stringer said overhauling the city pension funds is a priority.

The New York state pension fund, with $176 billion in assets, is run by one man: the elected state comptroller. While the wrong comptroller can mean bad things (remember Alan Hevesi), in most years the fund returns top-notch performance with acceptable costs.

The New York City pension fund system is another story altogether—although at $160 billion it is almost as large. It is composed of five separate funds, each run by a board which includes appointees of the mayor and city comptroller and the city’s labor unions. Its performance almost always lags that of the state, more often that not by about two percentage points. As a New York Times story this week pointed out, its costs are very high. (Check out my previous post here.)

This is old news. Former City Comptroller John Liu and Mayor Michael Bloomberg two years ago proposed to combine management of the funds and bring more investment decisions in-house. Mr. Liu said that could save $1 billion annually or 12% of what the city contributes each year. That estimate is probably high but $500 million in savings is clearly possible. The plan was blocked by the union leaders whose influence (to be big shots and help pick money managers) would be diminished.

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During last year’s comptroller race between Eliot Spitzer and Scott Stringer, Mr. Stringer backed the Liu-Bloomberg plan. In a debate he said that he had the labor contacts and support to make it happen.

I talked to Mr. Stringer this week and he said overhauling the structure of the funds is a top priority. He wouldn’t go into specifics, but he said he has already begun talks with de Blasio administration and the trustees to build support for a plan.

Many of the people who supported Mr. Stringer (and that includes me) did so because of promises like this one. It’s one he needs to keep.